When you're making music, there are no boundaries to how creative you can be.
However, when you start to consider what it might take to make your creative endeavors come to life, you begin to realize that you'll need resources.
Specifically, you'll need money — which is where the importance of our budgeting tips for musicians comes in handy.
Not only does having a budget prepare you for your career, but the expenses for everything else in your life.
The process of creating a budget will give you a realistic idea of how much you can spend, how much you need to save, and how that correlates with your current income.
This will make it easier to prioritize where your money needs to be spent and areas where you can save.
This article will give you the lowdown on creating a budget and some extra expenses to keep in mind when starting your career in the music industry.
what is a Music budget?
When beginning to navigate the music industry, your first thought probably wasn't about budgeting.
You may have been so wrapped up in creating your music or branding yourself that you forgot about the driving factor behind all of those activities — money.
For musicians, creating a budget that aligns with your vision and current financial situation allows you to estimate your income and expenses to limit surprises in the future.
Furthermore it forces you to either get more creative or simplify your ideas, especially when you don't have enough resources to make things happen.
For some, having a budget that does not exceed their income is important to them. For others, they may see the value of investing in the future of their career.
This is why laying out a personalized plan is so vital — instead of your finances impeding your success down the road, you can get one step ahead.
Don't let the idea of a budget bring you down either. This should be exciting in the sense of helping you to be more resourceful.
Realizing that you may not be able to afford to do something doesn't mean all is lost. This will get your mind racing on how you can potentially raise the money, get donations, or call in that big favor your friend owes you.
Regardless, without a plan and a budget, multiple opportunities will be missed, or your execution on things will be sub-par. Don't let that be you.
Creating your Music budget
Now that you know that you need to create a budget, where do you start? Well, as I mentioned previously — your budget needs to be personalized to your own life. Here are some tips to consider when setting up your budget:
Tracking your Musics return on investment
A return on investment (or ROI for short) is a way to calculate how much you could make or gain from your investment. Essentially the act of seeing if the way you're spending your money is helping or hindering your music career.
For example, if you pay an influencer $200 to post your song on their socials and get zero engagement or interactions from their following, this would be considered a poor return on your investment.
As you can see, the return doesn't always equate to a dollar amount, but you need to ensure that your money is being put to good use.
From our influencer example, you could then take your results and adjust your approach.
Maybe now you work with a different influencer that has an audience better suited to your music, or perhaps you determine that influencer marketing isn't effective for you, and your funds are better spent elsewhere.
By tracking your expenses and reviewing the results, you'll be able to monitor your rate of return and improve upon your business decisions.
After you create your budget, you have to stay diligent in following it. It's not easy, but it's your job to keep to your word.
This is where you have to prioritize the things you can't skimp out on and where you can cut some corners.
Do you need to purchase a top of the line laptop? Or can you make do with what you have? What are the things you need right now as opposed to the things you want and could probably do without? Thinking ahead, what expenses will be coming up in the future that you can't avoid?
Finances can be complicated, and we don't want to bog you down with our take on accounting. All we suggest is that you keep it simple and be smart! The reality is it comes down to discipline, knowing your situation, and understanding your priorities.
So before booking it to Bali for a month, think about if you need to purchase yourself a new guitar or some advertising first. Also keep in mind that being budget conscious shouldn't stifle creativity like these famous artists have proved here.
Sometimes you get what you pay for In Music
Staying on budget is essential, but sometimes you have to invest in the best of the best, which can often be expensive.
Cutting corners for certain things could even impede the quality of your work or be a massive hit to your reputation.
While buying the most expensive silver ring for your photoshoot may not be the best use of money if you're already over budget, investing in a good video editor would be more than justified.
You'll get better at this over time, and there will probably be a few hiccups here and there – but you'll soon realize that some things don't come cheap.
Do your research
When you're outlining your budget, it's good to have an idea of what other musicians have done.
To understand what is worth investing in, how much certain services or equipment costs, and some areas where you can save money – make sure you do your research!
Please don't shy away from asking other people in the music industry for recommendations or referrals, or even asking people online for their advice.
You may even get a discount through another musician or make a lasting connection with people in the music industry.
If you're starting out, your first reaction is probably to buy everything in sight!
Before packing your cart with thousands of dollars of equipment, think about what you can save on and what equipment you are better off renting.
A business needs cash flow to stay afloat
It's always good to have some money coming in every single month. So whether it's from a side job like offering freelance services, it's never a bad idea to have some extra cash in your pocket.
Eventually, the goal is that you'll be at a point where your extra cash flow is coming from the music itself! While you'll need to invest money into your career, that money has to come from somewhere.
However, the beautiful thing about the plan you're creating is that it can be used to help you tap into OPM — or “Other People's Money.”
If you have a well thought out plan, you can secure money from the bank, angel investors, grants, sponsorships, friends, you name it.
Trading your time for money at a job you might hate isn't always the only option to staying afloat financially, so don't just see this process as just a bunch of meaningless words on a page.
If you believe in yourself and your vision enough, chances are you can convince others to back you, but they'll need to understand the bigger picture and will want to know how you plan to make it happen before they cough up the dough.
Plan for emergencies
Anything can happen. Because of this, it's best to prepare for the worst in any scenario. When leaving some money aside for an emergency fund, think about all aspects of your life — not just your music career.
Again we're not financial gurus like Dave Ramsey, so we're not going to sit here and preach that you have to have $1000 or 6 months of expenses set aside in case of emergencies.
The reality is that you need to do what makes sense for you and your situation. That might be $100, or that might be $5,000.
Just know that things will go wrong, like your van breaking down while out on tour, your instruments breaking during a rehearsal before a show, your computer crashing, or even a pandemic.
Don't get left in the dust due to a minor or even major setback.
It's also a good idea to research arts funds in your country collected by various foundations and agencies. A quick search online will bring up many artist funds, grants, and opportunities if you're ever falling short.
laying out your Music expenses and income
Your music may be part of your lifestyle, but it should be separate from your personal life. The same goes for your personal and business expenses.
Always keep your business expenses separate from your personal expenses when you can.
However, it's always good to know how much you're investing in your music, and how much money you need to live your life.
Now that you have some tips in your back pocket to help you budget better, it's helpful to lay everything out in an organized and clear manner.
To keep it simple, just identify two categories for now, which are your income and your expenses.
What are your Music expenses
Even though the music industry looks shiny and glamorous from the outside, know that it can get expensive if you aren't smart with how you spend your money.
Again none of this is rocket science. Just think about what you're spending money on in terms of your music career.
If you're recording a song, you need to consider how much of your budget is going towards pre-production, paying for studio time, outsourcing someone to master your songs, and how much you're willing to invest in marketing.
Along with marketing, you may have to invest in your branding and improving your image online.
Some of your expenses could go towards photo shoots, buying new clothes, or even paying some people that you outsourced as your temporary social media team.
It would help if you also considered all of your personal expenses to know how much you have left after your life is taken care of.
This will get you in the right mindset to operate your life separate from your business, so you're not always paying for everything out of pocket.
Calculating your Music income
Depending on your situation, a lot of your income will probably stem from your day job or maybe freelance work that you do on the side.
Even if you have a stable salary job alongside your music career, it's always important to track all of your sources of income so you can keep an eye on how much money you're making.
Over time, this will allow you to stay on track and keep you accountable in terms of knowing how much you've spent over a given period.
You can also estimate your potential income in the years ahead and set a goal to work towards for how much money you hope to make annually in the future. You could also set a goal for when it's appropriate to increase your budget in certain areas.
As mentioned before, never be afraid of leveraging the support you have and tapping into OPM. It works and can ease a lot of the financial burden you might have.
Final Thoughts on our Practical Budgeting Tips For Musicians
I know budgeting and finances are not the first things that come to mind when thinking about a music career, but these things are crucial for every musician hoping to succeed in the industry.
It's always a good idea to document your finances as this will help you keep a record of your expenses and income and keep you on budget.
There are plenty of apps and platforms out there that make it easier to keep your finances in order. Apps like Wave Accounting or even Mint are free budgeting tools that are super useful.
You could also use tools like Google Suite to create a simple spreadsheet. We have provided you with our budgeting template that you can utilize if you wish.